The Hindu : Tamil Nadu News : Mixed fortunes for ships using Sethusamudram channel

Online edition of India's National Newspaper
Thursday, May 26, 2005

Tamil Nadu

Tamil Nadu

Mixed fortunes for ships using Sethusamudram channel

N. Ravi Kumar

Tariff, a major factor, going to consume half of their saving

CHENNAI: It will be a case of half-full or half-empty depending on how ships look at the benefit of using the Sethusamudram channel, as 50 per cent of the resultant saving for them on the fuel and chartering costs is going to go by way of tariff.

The tariff, a major factor to chalk the course of the Rs. 2,427-crore project as a business, is to be worked out based on the time charter and fuel cost savings.

While the Sethusamudram Corporation Limited (SCL), the special purpose vehicle for the project, will take the final decision, the final detailed project report recommends that the toll should be 50 per cent of the savings.

The composite tariff, it says, will be Rs. 16 per Gross Registered Tonnage (GRT) for ships up to 10,000 DWT (dead weight tonnes), Rs. 10/GRT for ships between 10,000 and 20,000 DWT, Rs. 7/GRT for ships having a DWT between 20,000 and 30,000, and Rs. 6/GRT for ships above 30,000 DWT. While GRT determines the volume of the cargo, the DWT pertains to the carrying capacity of the ship.

Tariff structure

The tariff structure, the project report says, has been worked out with the objectives of making it profitable for both the channel authority and the user; and simple and transparent.

"The tariff system must provide incentives to increase productivity and attract more," says the report prepared by L and T Ramboll Consulting Engineers.

The Union Minister of Shipping, Highways and Road Transport, T.R. Baalu, however, says the channel authority will take any decision on the incentives. Initially this would be SCL. Sources in the shipping circle, however, say the tariff suggested by the report would prove attractive for the vessels, as they stand to gain by avoiding going round Sri Lanka while moving between the Indian coasts.

The report has forecasted the tariff under pessimistic, moderate and optimistic scenario.

About 3,417 ships are expected to use the channel in 2010 and their numbers, in a moderate scenario, would increase to 7,141 in 2025.

Srinivas V. Balla, head (commercial) of Gati Coast to Coast, says: "Coal vessels going to Tuticorin from other ports on the eastern coast will be major beneficiaries as they go round Sri Lanka now. Sethusamudram will also improve coastal movement and reduce the burden on the roads."

The SCL chairman and managing director, N.K. Raghupathy, who is also the chairman of the Tuticorin Port Trust, says two-way traffic is to be allowed in the channel with a width of 300 metres. The project is expected to be commissioned in three-and-a-half years.

However, as a precautionary measure, the SCL will not be allowing crude oil vessels to use the channel for environment reasons in the first few years.

But ships transporting finished petroleum products will be allowed.

He said Rs. 3 crores was spent on various studies to assess the impact of the project on environment.

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